SARC Report recommends removal of discontinuance fees

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Monday 15 February 2010

The Statutory Authorities Review Committee of the South Australian Parliament (SARC) released its report on WorkCover on 12 February 2010 after 2 years of hearing evidence. While the report recommends removal of discontinuance fees, it is unlikely that the recommendation will be accepted by the Government.

The terms of reference for the Committee were to investigate:

(a) the deteriorating financial position of WorkCover;
(b) the effectiveness of outsourcing the claims management to a sole claims manager;
(c) the tender process and the probity of that process, leading to the appointment of the sole claims  manager;
(d) the exposure of WorkCover to the sub-prime financial market;
(e) the 2007 actuarial report submitted to the WorkCover Board in September 2007; and
(f) any other matters.

The report makes the following recommendations:

Recommendation 1: WorkCover should continue the use of satisfaction surveys of workers and  employers. The executive summary of the satisfaction surveys should continue to be published on their website and on request the full report should be supplied to interested stakeholders.

Recommendation 2: WorkCover establish a more open and consultative management style with injured workers and interested stakeholders such as the Work Injured Resource Centre (WIRC).

Recommendation 3: That WorkCover’s survey results allow for identification of those workers who return to work and that information be collated on a nationally consistent basis to allow comparisons between
jurisdictions.

Recommendation 4: WorkCover should stop its practice of significantly increasing fees, such as its ‘exit or discontinuance’ fee designed to discourage companies from becoming selfinsured. In particular, WorkCover should not proceed with the current fee increases outlined in the Workers Rehabilitation and Compensation (Claims and Registration) (Discontinuance Fee) Variation Regulations 2009, gazetted on 26 November 2009. (See Minority Report of Members Hon C Zollo MLC (Presiding Member) and Hon IK Hunter MLC.)

Recommendation 5: When the claims management contract is next put out to tender the number of claims managers be increased to 2 or 3 to remove the monopoly element of the current system.
(See Minority Report of Members Hon C Zollo MLC (Presiding Member) and Hon IK Hunter MLC.)

Recommendation 6: WorkCover should report every year in its Annual Report the level of claimed savings in legal costs under its sole provider contract. (See Minority Report of Members Hon C Zollo MLC (Presiding Member) and Hon IK Hunter MLC.)

Recommendation 7: The independent review to be conducted in 2011 of the impact of the recent changes to the legislation should also review the performance of the WorkCover Board
and management in implementing these changes. In particular, the review should consider WorkCover
and EML’s performance in the critical area of claims management. (See Minority Report of Members Hon C Zollo MLC (Presiding Member) and Hon IK Hunter MLC.)

Download the report